On january 1 year xxx1 holmes co borrowed cash from legacy

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On January 1, Year XXX1, Holmes Co. borrowed cash from Legacy Bank by issuing an $80,000 face value, three-year term note that had a 7% annual interest rate. The note is to be repaid by making annual payments of $30,484 that include both interest and principal on December 31 beginning Year XXX1. Holmes Co. invested the proceeds from the loan in land that generated lease revenue of $40,000 cash per year. Required: a) Prepare an amortization schedule for the $80,000 note for the three year period (i.e. show the amount applied towards interest and the amount applied to the principal for each of the four payments that Homes Co makes to Legacy Bank). Round off all calculations to the nearest dollar. b) Prepare an income statement for each of the three years; prepare a balance sheet as of December 31for each of the three years (Years XXX1 through XXX3). Assume that Homes started business on January 1, Year XXX1 by issuing common stock for $1,000 cash. c) Does cash outflow from operating activities change or remain constant each year? Why?

Reference no: EM13579517

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On january 1 year xxx1 holmes co borrowed cash from legacy : on january 1 year xxx1 holmes co. borrowed cash from legacy bank by issuing an 80000 face value three-year term note
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